Inflation hits older people hardest, despite the boomer-bashing fad

Today's older people may hold most of society's wealth but they are also extremely unequal - and inflation hits the poor hardest, writes Craig Berry.

The Office for National Statistics today published CPI inflation figures for December 2010; the news is that inflation was 3.7 per cent in December, up from 3.3 per cent in November. This is a worrying sign for the government, with inflation likely to exacerbate the impact of public spending cuts in terms of both public procurement and individual financial circumstances. The Bank of England continues to overshoot its inflation target.

We should be just as worried, however, about the intergenerational impact of inflation. The ONS reports that the main drivers of the inflation rise are air transport, fuel, gas prices, and food. Older households spend a far greater proportion of their income on many of these items.

The Living Costs and Food Survey 2009 shows, specifically, that:

a) Households with a referent person aged 75 or above spend 13.3% of their disposable income on housing costs including fuel and power, and 65-74 households spend 10.2%. This compares to 9.1% for 30-49 households, and 8.1% for 50-64 households;

b) Households with a referent person aged 75 or above spend 12.2% of their disposable income on food, and 65-74 households spend 11.8%. This compares to 8.5% for 30-49 households, and 9.4% for 50-64 households.

Of course, the impact of current economic and fiscal woes on children and young people should not be under-estimated. Daniel Elton’s recent article, outlining the impact of public spending cuts in this regard, is therefore extremely timely. Yet there are serious problems underlying all analyses of intergenerational conflict between old and young.

Firstly, as the EHRC points out, it is impossible to prove the collective, deliberate agency of a particular age group. This is a drawback which mars, at least to some extent, all of the recent popular literature on this subject, including David Willets’s “The Pinch“, Francis Beckett’s “What Did the Baby Boomers Ever Do for Us?” and Ed Howler and Shiv Malik’s “Jilted Generation“.

The analysis ignores the significant inequalities that exist among both today’s retirees and those approaching retirement. Inequalities within generations are far greater than those between generations and, of course, different forms of inequality develop and manifest at different stages of the lifecourse.

Assessing the impact of cuts on particular age groups is therefore difficult enough. But when you consider that different age groups will have different needs and expectations at various stages of life, it becomes necessary to consider economic realities outside the direct control of government – of which inflation is a key example – before intergenerational equity can be determined.

Furthermore, it does seem apparent that the current government has downgraded the importance of tackling pensioner poverty in favour of child poverty (the Labour government had prioritised both). The Department for Work and Pensions’ structural reform plan (the coalition version of a public service agreement) includes ‘Tackle Poverty’ as one of six priorities – but the actions and milestones relate entirely to children and their families.

Pensioner poverty appears under the ‘Get Britain Saving’ priority – but the emphasis is on eliminating poverty among future pensioners.

Today’s inflation figures should teach us that generational nit-picking will get us nowhere. When it comes to suffering at the hands of the recession and the deficit reduction plan, old and young really are in this together.

14 Responses to “Inflation hits older people hardest, despite the boomer-bashing fad”

  1. Daniel Pitt

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  2. ageing news

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  3. Nigel Gardner

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    RT @ageingnews: Google News: Inflation hits older people hardest, despite the boomer-bashing fad – Left Foot Forward //dlvr.it/Db3cZ

  5. Celyn

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  6. Éoin Clarke

    The 3.7% inflation we witnessed today was for December. That is

    a) before a 2.5% VAT hike
    b) before a fuel tariff
    c) before travel/energy companies raised their prices
    d) Factory Gate Manufacturing inflation rose again..

    Inflation for Janaury in real terms was c.6.5%…. the results will be confirmed in one month’s time.

    But the net result with wages growing at a third of the rate of inflation is that we are all becomming pooer every day.

  7. Stephen Lintott

    RT @leftfootfwd: Inflation hits older people hardest, despite the boomer-bashing fad: //bit.ly/fVcYtL

  8. william

    And who is the architect of us all becoming poorer,step forward the man that abolished the economic cycle, who pretended that welfare payments added to GDP… I give you Gordon…

  9. Chanelle Schneider

    #genychat #UK RT @leftfootfwd: Inflation hits older people hardest, despite the boomer-bashing fad //bit.ly/eEdTOp

  10. Hens4Freedom

    RT @leftfootfwd: Inflation hits older people hardest, despite the boomer-bashing fad: //bit.ly/fVcYtL

  11. Robert

    Yes Gordon the Beloved brown, but Welfare of course is being paid to cheats and fraud we all know that. Or if you watched the BBC in the morning you would have seen Saint and scrounger, programs the labour party used to brain wash people into seeing all peoples on benefits as lazy.

  12. Lescromps

    Inflation hits older people hardest, despite the boomer-bashing fad | Left Foot Forward //bit.ly/hTMyun I;m a baby boomer so fuck off

  13. Ed

    VAT will drop out of the inflation figures for next month. Its very likely (based on previous experience) that VAT is already priced in- its a long held tactic of retailers to raise prices before a VAT rise (they’ve known about it for months) and then claim to their customers they’ve cut prices.

    Whether we put up interest rates is a serious cross party debate- i don’t think its hugely partisan. My instinct is not too; we have faced the spectre of deflation for the last couple of years and inflation is far more the lesser of two evils. Secondly, we hear on these pages of the need to get lending going again. Quite simply you can’t raise interest rates and then expect lending and then growth to go up. Its a difficult balance, lets not pretend that its not.

  14. Bernard and Paul

    RT @leftfootfwd: Inflation hits older people hardest, despite the boomer-bashing fad //bit.ly/eEdTOp

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